ERoad posts annual loss as sales miss prospectus forecast, shares fall

Thursday 28th May 2015

ERoad, the electronic road user charges and transport services company, posted a full year loss in its maiden annual report as a public company, while sales missed its prospectus forecast. The shares fell.

The Auckland based company reported a loss of $1.3 million in the year ended March 31, from a profit of $2.9 million a year earlier, and wider than the loss of $1 million forecast in its July prospectus. Sales increased 76 percent to $17.6 million, below the $19 million it predicted in its prospectus. The company said profit before tax and listing costs was $1.1 million. It didn't declare a dividend.

Customers, particularly in the US, were opting to rent ERoad's hardware rather than buy it outright, and that had "shifted some revenue" in the year, but was "improving long term value," it said in a statement.

ERoad pared back its outlook from the forecast in its offer document, saying it expects sales of $28.6 million and earnings of $5.5 million in the 2016 financial year, lower than the projection for revenue of $34 million and pre-tax profit of $7.7 million.

The company's shares fell 1.3 percent to $3.95, and have gained 32 percent since listing last year.

Founded in 2000, ERoad says it was the first company to provide a nationwide GPS based road user charge system in 2009. It first turned a profit of $2.9 million in the 2014 year on sales of $10 million.

As vehicles become more fuel efficient, ERoad's technology seeks to cash in on a shift towards user pays for road building and repairs from the traditional excise fuel tax in the US and across the globe. Last year, ERoad entered the US market via the state of Oregon, and in an investor presentation said its growth in the new market was about 8 to 10 weeks behind target but it had secured $3.1 million in customer contracts.

“ERoad’s new electronic fuel tax service has been well received by customers and regulators in North America," chief executive Steven Newman said. "I am also very happy with our development of an electronic logbook to support commercial drivers to meet their hours of service obligations, in preparation for the United States Federal mandate requiring all interstate drivers to adopt a compliant electronic hours of service product by late 2017.”

The company debuted on the bourse in August, raising $40 million in new capital to fund international growth, selling 15.3 million shares at $3 apiece. Existing owners sold 2 million shares, or $6 million worth, into the initial public offering, retaining 75 percent of the company.

At the March 31 balance date, the company held $34.1 million in cash and equivalents, below the $40.1 million predicted in the prospectus.

BusinessDesk.co.nz

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